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tv   Nightly Business Report  PBS  March 12, 2012 7:00pm-7:30pm EDT

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>> it will be definitively bad for consumer spending and bad for g.d.p. our estimates for g.d.p. are sub 2% for the balance of this year and sub 2% for 2013. >> susie: from main street to wall street to pennsylvania avenue, everyone's talking about the sharp rise in gas prices and what it could do to the economy. it's "nightly business report" for monday, march 12. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:
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captioning sponsored by wpbt >> susie: good evening, everyone. my colleague tom hudson will be along later in the program. oil prices fell more than a dollar a barrel today, suggesting there might soon be at least some relief at the pump. and, it couldn't come soon enough as high energy costs are a big topic from wall street to washington. in new york trading, oil fell about one dollar to $106.34 a barrel, the first decline in four sessions. still, the average price for a gallon of unleaded gasoline rose 12 cents in the past two weeks to $3.80 a gallon, reflecting february's jump in crude prices. but, those increases may start to slow if crude prices stop climbing. we have two reports this evening, looking at the impact
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of energy on the u.s. economy and on the presidential election. we begin with suzanne pratt in new york. >> reporter: if you're like most u.s. drivers, it's been hard to miss the big run-up in prices at the pump. gasoline started moving higher right after labor day and this year alone the national average for regular unleaded has surged 52 cents to $3.80 cents a gallon. still, it's unclear whether the higher energy costs are already curbing spending in the u.s. commodity strategist shelley goldberg says they're certainly affecting consumer behavior. >> you're seeing that people are taking staycations if you will, maybe canceling that trip to the mall on the weekend or to the movies or just travelling less. >> reporter: but, other experts point to the recent strength in job market data and consumer confidence as proof the economy is so far shrugging off higher energy costs. still, others say don't worry
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the truly negative effects are coming. it will just take several more weeks before they show up in economic statistics. >> the question is will there be any large jump in the summer months when gasoline usage is a lot higher and of course give the geopolitical backdrip in the world. the concern that there could be a materially new high in the price. that could change things. >> reporter: still, americans may be able to better weather pricey gasoline today because households are used to the sticker shock of $4 a gallon. it's the same price point that took a big bite out of consumer confidence and spending in 2008 and 2011 and then led to slower g.d.p. others say there will be no escaping the negative economic effects of a spike in gas prices. >> it will be definitively bad for consumer spending and bad for g.d.p. out estimates for g.d.p. are sub 2% for the balance of this year
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and sub 2% for 2013. >> reporter: it was the summer of 2008 when gas prices hit a record national high $4.16 a gallon. some experts say we'd have to pump through that price before gas would do any serious damage to the economy. guess what, we're only 36 cents away right now. suzanne pratt, "nightly business report," new york. >> reporter: this is darren gersh in washington. the price at the pump prompted the obama administration today to perform some political damage control. >> domestic oil production is at an eight-year high in the united states of america. >> the global price of oil is affected by a variety of factors, some of which are well beyond the control of any administration. >> we're not at a point where we can drill our way out of this problem. >> reporter: inflicting political damage is the job of republican presidential candidates. and they blasted the administration for allowing gas prices to double on the president's watch. >> i sometimes wonder why he does the things he does because they're not good for america if
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they're not creating jobs, not raising incomes, not getting us gasoline that we can afford. obama's energy plan is really only one word. no. no drilling, no keystone pipeline. no listening to the american people. >> reporter: the criticism may be having an impact. a new "washington post"-abc news poll finds two out of three americans disapprove of the president's handling of gas prices. but analysts say the connection between overall presidential approval ratings and gas prices is not as clear cut as you might think. the university of virginia's center for politics found a strong, but not overwhelming correlation between gas prices and overall presidential approval ratings. but analysts say many factors go into selecting a president. if the economy keeps creating jobs, the president will be more likely to keep his job even if oil prices rise further. but if the economy flat lines and gas prices keep rising, the president will likely bear the blame. gas prices will be just kind of this easy thing to point to for why the economy is bad. and that will be very bad for
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president obama. >> reporter: but this begs the question of whether any president can in fact control gas prices. energy analysts say the answer there is easier. >> if we did credibly signal the futures market that we were going to produce reserves that no one had ever counted in their universe, then opec could conceivably say, well great, we're going to tighten up, and you do all the producing at your high cost, and we'll keep our low cost oil off the market. bottom line, it might not change price very much at all. >> reporter: darren gersh, "nightly business report," washington. >> susie: a day of indecisive trading in the markets today. investors were holding back ahead of the federal reserve's policy meeting tomorrow waiting to see what policymakers decide to do about interest rates. by the close, here's where the major averages finished the day. the dow added 37 points, the nasdaq fell more than 4 and the s&p up just a fraction. joining us to talk more about the outlook for the markets stuart schweitzer, vice chairman at j.p. morgan private bank.
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thanks for joining us. >> absolutely, always a pleasure, susie. >> susie: so as we just said, investors are waiting on the fed, are you expecting any new policy moves coming out of that meeting tomorrow? >> i don't think so the economy is doing okay. so i think the fed should and probably will stand pat. and wait to see what unfolds. >> you know, investors are also waiting to hear from the fed about those bank stress tests, that should be coming out at some point this week. do you expect any surprises there? >> well, i think the market has been focused on this as you mentioned earlier. and no, i don't think there will be very many surmises. the fed is on the case. which means that investors can at least have a little bit of less concern if the fed's doing their worrying for them about the way things might unfold, then investors perhaps perhaps can worry a little bit less. >> are you investing in any of the big banks.
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>> well, we invest on a more sector neutral basis. and we certainly own for, on behalf of our clients significant amounts of large cap u.s. equity. and we think that equities are reasonably attractive at this legals. for clients that have a lot of cash on the sidelines as so many investors do, these are still reasonable entry points to get back into the market. >> susie: so tell us a little bit about that, yes, investors are sitting with a lot of cash. they are very nervous still. you heard our report about oil & gas lean prices. they are very concerned about things that are going on around the world. and so they're still sitting on cash. what are you telling them to do with their money, where should they put it? >> we're advicing clients to be diversified and that means owning some stocks but also some bonds. and in the case of the bonds, the one risk that really does concern us most is that interest rates could rise, the longer the economy keeps growing, the more likelihood
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there is that interest rates ultimately will start to back up and as that whats, bond prices will go lower. so we advice clients to maintain shorter than normal durations or maturities for the bonds they own. and we think the place to be invested in the bond market is not so much government bonds as it is corporate bonds, high-yield bonds, for example, which offer relatively attractive returns, we think, compared with the risks entailed. >> stu, what is your thinking on u.s. stocks versus international stock. given the lingering concerns about what is going on in europe, new concerns about the chinese economy slowing down, what is, where do you stand on that debate? >> well, first, susie, we really turned very strongly negative on european equity two years ago. and we remain concerned about europe. they are kicking the can down the road but they're not fundamentally solving their problems theferment's merely arresting for the time being a very difficult situation. >> now as to u.s. versus the
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rest of the world, i would say we like them both. we like the u.s., and that is because we have an improving economy here. and as for asia and the chain ease slowdown, well, china is slowing down but so is chinese inflation which allows the chinese authorities to provide some monetary support for their economy and their market. and so we think that asia will do okay here. >> okay. stu, let me just jump in here because we have less than 30 seconds. you said are you cautiously optimistic. you have told us about the optimistic part watch. are you cautious about. what is your biggest worry? >> oh, susie, i think the biggest worry is that this nascent recovery could falter yet again. you mentioned gasoline prices earlier. it's not some of the upward creep of gas prices but if prices should spike upward as could happen in the summer, that would be very unsettling for the economy. and it might derail this job recovery which has been running now quite a bit stronger over the last six months. >> susie: all right, stu,
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thank you so much as always, it's a pleasure talking with you. >> always my pleasure, susie, thank you. >> susie: we've been speaking with stuart sheetser, of jpmorgan private bank still ahead, the role of technology in building smarter stadiums. >> we have 70,000 to 72,000 people that can potentially be within our stadium walls at any give time. >> susie: uncle sam has officially filed a $25 billion settlement with five of the nation's biggest banks over foreclosure abuses. today's filing comes more than a month after 49 states inked the far-reaching deal with ally financial, bank of america, citigroup, j.p. morgan and wells fargo. if approved, the settlement will lay to rest accusations of so- called "robo-signing"-- the practice of processing foreclosure documents without properly checking them. here's how the money's being carved up $17 billion goes to homeowner relief programs like principal reduction.
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$3 billion to refinance underwater mortgages. and $5 billion to federal and state governments with some of that going to borrowers whose homes were wrongly foreclosed. if you're one of the millions who want the new ipad, get in line! the device is expected to sellout this friday when it debuts in stores with an estimated one million new ipads flying off shelves around the globe. apple has already depleted its pre-order inventories. online orders are now expected to ship in two to three weeks. analysts call it a positive sign for demand. and a new management line-up at pepsico. today the company tapped wal- mart executive brian cornell to lead its pepsico america's food division. he was brought in to help turn things around. pepsi has been losing marketshare to rival coca cola. cornell is also seen as a potential successor to c.e.o. indra nooyi. cornell is no stranger to pepsi. he spent six years at the soft-
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drink maker before leaving to run wal-mart's sam's club warehouse stores. >> susie: how stressed would your bank be if we were hit with another major recession? we'll find out later this week when the federal reserve issues the results of its latest bank stress tests. late today, we got some details about what those stress tests will look like. the nation's 19 largest banks were tested for what's called a
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severe recession scenario. that's unemployment at 13%, a 50% plunge in stock prices and a 21% drop in home prices. the results are expected after the market closes on thursday. concerns about those stress test results weighed on the market today. but the dow still closed higher, extending the recent mini rally to four days. let's take a look in tonight's market focus. investors were seeking safety today. they were primarily interested in defensive plays, with utilities, consumer staples and telecom on many shopping lists. the utilities sector was the strongest group in the s&p 500 up over 1%. constellation energy and exelon were standouts, after constellation agreed to pay $235 million to settle a probe of its wholesale power trading. the payment clears the way for its merger with exelon.
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both stocks gained more than 2% today. in the consumer staples area we saw pockets of strength throughout the sector.: hershey's was among the sweetest, rising nearly 2%. pepsico and cosmetics queen estee lauder rose each more than 1% as well. exxon mobil was the top performing stock in the dow. the oil giant and a major turkish energy company reportedly are in talks to explore for shale gas in turkey, an area rich in recoverable shale gas. exxon shares rose 1.5%. meanwhile, financial stocks bucked the market's up trend today, amid worries about the fed's latest evaluation of the banking sector. still, some analysts are urging clients to be on the look out for dividend increases from those banks that pass the tests. j.p. morgan chase, wells fargo and citigroup are considered among the strongest capable of weathering another economic crisis. but shares ended mixed.
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turning to a couple of foreign buyouts: shares in zoll medical spiked almost 18%. almost 24%. on word it's being acquired by japan's ashai for $2.2 billion. zoll will run as a separate unit, expanding asahi's u.s. healthcare operations as it seeks to diversify its businesses. china's largest online video company youku said today it's buying china's number two online video firm tudou holdings for over $1 billion in stock. both companies had been locked in a bitter dispute over copyrights, which recently settled the merger will mean cost-cutting and allow the parties to concentrate on their video platforms. together youku and tudou make up over a third of china's online video market. tudou shares exploded to the upside, more than doubling. youku shares also got a nice boost as well. rising almost 24%. and finally tonight, yahoo is suing facebook over ten patents, including advertising methods and systems on the web. the lawsuit filed in san jose, california today is the first
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major legal battle between technology giants in social media. shares of yahoo closed at $14.49, down 1%. and that's tonight's market focus. >> susie: in tonight's word on the street: change. a new c.e.o. took over today of the financial information company. she's elisabeth demarse and joins us to talk about her plans for thestreet.com. elisabeth congratulation, thanks for joining us. >> oh, thank you. >> so, tell us in a nutshell what is your vision what is your mission for thestreet.com. >> well, sure. i mean everybody knows that the street was founded by jim cramer in 1997. to bring wall street to main
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street and has been delivering on that brand promise for the past 13 years. and our job is to, you know, inform, educate, investigate everything wall street. the money markets, equities, foreign exchange, commodities. even the investment banks themselves. so we have a foundation that is fantastic and a brand name that is fantastic but we need to take it to the next level. and that includes a number of things like social media, making sure that we have the platforms that everyone is moving to, an i have to tell you this is happening so fast it's not even fun so i'm very excited. >> let's talk a little bit about the landscape out there because competition is fierce. there's a lot of companies whether it is market watch or yahoo! finance that are also battling for people
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riferjth category for american consumers and has advertisers that want that as well. so i think that through execution and doing some things with technology that haven't been done at this company before, i think they can continue to see our growth, we can continue to grow. >> here at nightly business we certainly agree with you for the demand for financial information but i want to talk to you about a public company, your stock trading on the nasdaq. investors have some doubts. your stock has been down something like 48% this year
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alone so what do you say to investors who own your stock and investors who might be interested in buying now that you are there. >> well, okay, so you know, we have a 5% dividend, ten cents a share and 75 in cash. we are generating cash but we're trading below cash. so i think with the company like ours that has been moving-- losing money at that income level, people that pay that much attention, and it just looks like we're perpetually losing money. >> susie: i hate to cut you off. thank you so much, elisabeth, good luck to you. >> okay, you bet, thanks. >> susie: we have been speaking with elisabeth demarse, the newically of-- c.e.o. of thestreet.com. >> susie: let's take a look now at what we're watching for tomorrow. what's next for interest rates. we'll find out as fed policymakers meet in washington. we head to a small business in new york for a check on hiring and whether small businesses are adding jobs.
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then, with much of the nation still in recovery mode, we look at houston's booming economy. >> if i took a ruler and laid it across here you'd actually see that we employ more people here than we did prior to the recession. >> susie: imagine a business that's open one day a week and 70,000 customers come through the doors, expecting an experience to remember. that's the business of any n.f.l. team at its home stadium. the business of running a stadium has to compete with high-definition television in your home. the miami dolphins hope to step up its business by playing smarter at its home field. tom hudson reports. >> reporter: fans come for the football, but teams know in the competition for their entertainment dollars, they have to step up their game off the field. >> we have a lot of complex systems in place when you look at the transactions you have to process within a four hour period. we have 24,000 plus cars that we need to park.
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we have 70,000 to 72,000 people that can potentially be within our stadium walls at any give time. >> reporter: getting thousands of excited fans in and out of it's team owned sun-life stadium is one of the places the dolphins call pain-points-- places where fans run into crowds slowing down their experience and possibly how much they spend at the stadium. so the team has brought in technology from i.b.m. to collect data from entry gates and stores and eventually parking lots. finding the west 25 parking spots looks easy in an empty lot, but the technology aims to help customers find it quickly when kick-off nears. >> by better controlling the flow of information across those different systems what it enables you to do is to provide better value and extend out of that. >> it takes a lot of work to fill up a stadium this size each and every sunday afternoon but the dolphins hope with their new partnership with ibm will make the business run more efficiently. allowing people to find their
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seats faster, get their concessions faster, spend some money and get back to enjoy the game. >> reporter: this technology is called business analytics and optimization gathering hundreds of thousands of pieces of data, looking for correlation and offering action plans. think of it as gathering real time supply and demand information, the supply of popcorn at one concession stand versus the demand for hot dogs someplace else. i.b.m.'s vision is called smarter planet and through the first nine months of last year, the unit's revenues were up 50% thanks to projects in telecommunications and retail industries. for dolphin fans, more data may mean a better experience, but it still can't guarantee a win. >> it's unfortunate that we can't control the outcome on the field, what happens with our teams. >> reporter: tom hudson, "nightly business report," miami. >> susie: that's "nightly business report" for monday, march 12. we want to remind you this is the time of year your public television station seeks your support. thanks for joining us. i'm susie gharib. we'll see all of you again tomorrow evening.
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"nightly business report" is made possible by: captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org
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